The decision from the Trump Administration to raise tariff’s on solar equipment will be passed down between now and late January. Solar industry professionals wait with bated breath as higher taxes on imported solar equipment could be in their foreseeable future.
Two U.S. subsidiaries of the foreign solar panel manufacturers filed a trade complaint with the International Trade Commission this past year. The trade complaint is a rarely used one that asks the ITC for import relief for domestic industries.
While it might seem like common sense that a foreign import tax on solar panels and equipment would encourage domestic solar growth, it is not the reality. This tax hike would really be a great detriment to the current U.S. solar industry. It would serve to thwart clean energy innovation and would put American jobs within the solar sector in grave danger. The solar boom that has followed a steady, if not exponential, upward trend in recent years could come crashing down.
U.S. solar energy growth
This image shows solar energy production in the U.S. since 2010.
Measured in kilowatt hours, energy amounts include residential, commercial, and industrial solar systems.
The Conversation, CC-BY-ND
Economists who study climate and energy policies argue that if the government wants to support U.S. solar production and innovation, they should lower costs around the supply chain and offer more subsidies that directly support solar production and research. If the solar industry received this kind of support and relief from the government, they would be able to compete globally without losing jobs or traction.
Raising taxes on imported solar panels and other solar equipment from foreign competitors is a short-term solution to a long-term problem.
According to the Bureau of Labor Statistics, job growth would continue in an upward trend over the next decade if the status quo was maintained. In 2016 it was reported that over 260,000 Americans worked in solar, more than doubling from 95,000 solar employees just seven years prior.
Of these 260,000 solar-related jobs, less than 15% are in manufacturing. Nearly all other employment in the solar energy business are in sales and installation. If the cost of imported solar rises, the demand for purchase and installation will fall in the U.S.
The cost of going solar in the U.S.
Installing residential, commercial, or utility-scale solar systems dropped in the past seven years from $5.79 per watt to $1.54.
Prices are shown here as $/watt and figures for 2017 are calculated from June 30th on. The methodology for analyzing this type of data switched from reported price in 2014, to modeled price. Prices from 2010 to 2017 are capacity-weighted.
The Conversation, CC-BY-ND
If America wants to become a leading figure in solar production, they will need to shift focus and adopt a different strategy with more government subsidies, similar to the Chinese government’s model for renewable energy incentives. China’s solar success is backed by low-interest loans for companies, offering cheap land used to produce solar, and technology development assistance to encourage solar innovation.
Targeted subsidies are the most viable option if the U.S. wants to be a global solar energy leader. Unfortunately, the Trump Administration is moving federal funding away from renewable energy and all programs that work towards reducing climate change. “This is a case about two companies who are bringing a petition about which almost the entire rest of the solar industry is in agreement in opposition,” said Abigail Ross Hopper. Hopper is the president and chief executive of the Solar Energy Industries; this is her reaction to the International Trade Commission’s ruling.
This new tax policy could not only hurt the U.S. job market and bring solar innovation to a halt, but also create negative global relations and start a trade war over clean energy production. This would discourage global progress and movement towards replacing fossil fuels.